Wednesday, October 07, 2009
Editorial: About that waste, fraud and abuse
An audit is helpful in detailing a trail of municipal misspending. Tighter controls can prevent it from occurring.
From the RoundTable blog
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The response so far by Roanoke to allegations that two top Valley Metro employees abused public finances for their own enrichment has been on target.
The employees were fired. The city and federal government will be reimbursed by their employer, First Transit, and the city will seek new proposals for private companies wanting to manage the public bus system.
All good. But is it enough?
Extensive audits documented at least $14,000 of improper purchases by the former general manager, Dave Morgan, and $55,000 worth of unnecessary expenditures on office furniture with the contracts awarded to the wife of former assistant general manager William "Chip" Holdren.
The pair pulled off their schemes because no one was looking over their shoulders, scrutinizing receipts and bids.
"When you have your general manager and your assistant general manager as your top two folks who are directly involved in the situation and not following the rules and not asking their staff to follow the rules, this is what can happen," said Drew Harmon, Roanoke's municipal auditor.
As a result, the city has since asked for additional accounting and reporting procedures to be put in place for the Greater Roanoke Transit Co. Council shouldn't stop with the buses.
Great sums of money move through the city to other authorities, commissions and agencies. As the public regrettably found out two years ago, even a council member can steal public funds. Council reacted to the double-dipping and padded expense accounts of one of its members by adopting tighter controls on its own spending.
This method of reacting to specific incidents is scattershot. Rather than wait for the next abuse to surface -- and it will -- city management should look at the structure and accountability of each entity to ensure theft can't come easily.
Routine audits check whether proper bookkeeping practices are followed and if receipts document expenditures. They don't note if several rounds of booze are charged to a credit card.
Not every agency and department can undergo the type of audit that was recently completed on the transit account. That level of scrutiny kicks in when suspicion arises. Besides, audits mostly catch what happened, not prevent it from occurring.
That comes only from rigorous day-to-day oversight from which top management should not be excluded. Left alone, unscrupulous people in trusted positions can do the most damage.
